Our purpose is to support those in our care to lead their best lives, serving our community’s needs.
On Monday 6th December, the BBC’s Panorama programme looked at several different companies that own care homes in the UK, including HC-One, how care is funded, and whether for-profit models and Private Equity owners are suitable for the sector.
The programme also showed an example of poor care at one of our homes. This level of care is never acceptable, and we have apologised in person to the family of the Resident affected. We continue to work with all families at this home to make sure we are getting care right for their loved ones.
We believe the interests of our owners are aligned with those of our Residents and their families – everyone expects, deserves, and benefits when our homes provide great care. Only by providing the very best care can we ensure people will choose our homes. We depend on a strong reputation in the communities we serve for our homes to be full which is the only way to create sustainable financial returns.
In a sector which receives far too little Government funding – as is routinely recognised by every major charity, think tank, Parliament, and Panorama – delivering sustainable returns to investors is critical to making sure new funding comes into the sector to build new homes and upgrade existing ones as we all strive to meet ever more complex care needs.
Our ownership contributes positively to our ability to deliver the kindest care for our Residents. This is how.
Our owners have already invested £145m into our homes – five times more than they have taken out of the company.
We have committed long-term investors. In the past five years (since 2016) they have contributed £145 million which we have spent on improving the quality of our homes and the pay of our Colleagues. They have further committed an additional £112 million over the next two years (2022/2023).
During that same period (since 2016), our owners have received £32 million in a combination of dividends and management fees. No shareholder dividend has been paid since 2017, and our owners voluntarily waived their management fees during the pandemic.
We are spending our money on the things that matter most – investing in care, the quality of our homes, and the pay of our Colleagues.
We are committed to investing in improving services so that Residents receive the very best care. This includes making sure our carers are highly trained and rewarded for their skill and dedication.
On 1st December, we announced an investment of over £17 million in frontline pay, which will see Colleagues with less than 6 months experience in the sector paid at least £9.55 per hour from this New Year. There will be a pay raise for carers after six months’ experience, and another raise after two years’ experience, ensuring the majority of our carers will earn over the Real (Foundation) Living Wage, wherever they are in the UK.
We are also well underway on a £54.5m refurbishment programme to improve over 200 of our care homes, which will mean Residents live, and Colleagues work, in more comfortable, more modern environments equipped to better meet complex care and dementia needs, with further investment in technology and quality support.
We are the only care provider investing in Council and NHS funded care services at scale. This underlines HC-One’s commitment to delivering high-quality care to everyone in the communities we serve, no matter their resources.
We own almost all our homes, so our debt is a mortgage.
Unlike many care providers, we own almost 90% of the homes that we operate – this would not be possible without debt. Having debt is equivalent to having a mortgage when you own your own property. This gives us more financial stability and flexibility.
If we didn’t own our care homes, we would instead need to rent them from independent landlords, on long term leases giving us less control over our homes and the care we can give.
The BBC Panorama programme referenced that some Private Equity companies use high-interest loans, and complex debt structures between companies, as a way of extracting money and reducing tax. They questioned whether HC-One had done this.
We have not. Our loans have been used to buy and support the homes we own, with interest rates that lenders were charging UK care home sector at that time. We do not use our structure to artificially reduce our earnings.
In April 2021, we consolidated all our loans into one new mortgage with Welltower, a New York Stock Exchange listed healthcare investor. Our mortgage has a loan-to value ratio of 58% and we pay an interest rate that is competitive for our sector.
80% of our private-pay income is spent on providing care.
This includes the pay, pensions and training of Colleagues pay, food and utilities, maintenance, and our Support Team.
From the rest, we pay our mortgage – without which we would pay rent, traditionally one of the highest costs for care providers.
With what’s left, we re-invest into the fabric of our homes, technology, and the quality of care we provide, and provide a financial return for our shareholders.
We have spent the Government’s Covid-19 grants on supporting our homes to deliver kind care.
The Covid-19 pandemic has been a very challenging time for everyone connected to our homes and across the care sector. Throughout the pandemic we have done everything in our power to keep our Residents and Colleagues safe. We made sure our homes always had the PPE they needed, we developed new Coronavirus specific training modules, and we pulled together as a team to help Residents stay connected with their loved ones.
During the pandemic, and to help us support our homes, we received some additional Government funding. This money was spent on supporting our homes, Residents and Colleagues, including providing extra equipment, staffing, and training, in line with the Government’s criteria.
We have not paid a shareholder dividend during the pandemic. In fact, we haven’t paid one since 2017.
Our shareholders did not take a dividend during the pandemic, and they have not taken one since 2017. We make monthly contractual fee payments to our shareholders, which are common in property-owning companies and are known as ‘asset management fees’.
These were paid up to May 2020, at which point the shareholders voluntarily waived these fees. For the Financial Year 2019/20, we paid a total of £3.1m in asset management fees.
These fees resumed this summer.
In the 2019/20 Financial Year, there was also a further £1.7m interest payment on a loan which we had used to own our homes.
We pay tax in the UK and file our company accounts in the UK.
Our ultimate parent company is in the Cayman Islands. Regardless of the location of our different companies – whether in the Cayman Islands or in the UK – all our income is subject to UK tax.
We also file our accounts at Companies House under UK GAAP, the UK’s regulatory body for company tax.
We recognise the reputation of the Cayman Islands, however it is jurisdiction frequently used when companies have owners from multiple countries, as is the case for HC-One.
We have not used our corporate structure to artificially reduce our earnings or the tax we pay.
We are committed to transparency.
Transparency is a founding value and this really matters to us.
We are making our company structure simpler, by naming every company “HC-One”, and we are more than halving the number of companies in the Group from 81 to 37 by December 2021.
We have always published our audited financial statements in the UK, we have answered the questions that journalists and researchers put to us, and we do what we can to help them understand our finances.
In April 2021, we consolidated all our debt into one mortgage with one organisation. This will make it easier for everyone to understand the size and cost of our mortgage.
We are proud of what we have achieved so far and are excited at what the future holds.